Liontown Resources Ltd (ASX: LTR) shares are having a decent session.
In afternoon trade, the lithium miner's shares are up 1.5% to 66 cents. This compares favourably to a 0.3% gain by the ASX 200 index.
The good news is that this could be the start of even greater gains according to one leading broker.
Liontown shares tipped to rocket
According to a recent note out of Bell Potter, its analysts think that the lithium miner's shares are being seriously undervalued by the market.
So much so, it is urging investors with a high tolerance for risk to snap them up while they can.
Commenting on the company, the broker said:
LTR is a Perth-based mineral exploration and development company. The company's focus is the Kathleen Valley lithium project (100% LTR). Key DFS metrics are an NPV(8% real) of $4.2b from spodumene production of around 511ktpa from 2024 expanding to 658ktpa. […] The company has a strong ESG focus as exemplified by its Native Title Agreement and net zero by 2034 carbon emission target.
The note reveals that Bell Potter has a speculative buy rating and $1.85 price target on Liontown's shares. Based on its current share price of 66 cents, this implies potential upside of 180% for investors over the next 12 months.
To put that into context, a $2,500 investment would turn into approximately $7,000 by this time next year if Bell Potter is on the money with its recommendation. Though, it is worth remembering that this is not guaranteed and Liontown is a speculative option. So, you could just as easily lose money on an investment.
Why is the broker bullish on this lithium miner?
Its analysts are big fans of the company's Kathleen Valley Lithium Project and see it as a highly strategic asset. They explain:
LTR's 100% owned Kathleen Valley lithium project remains highly strategic with initial production imminent [now underway], a long mine life and located in a tier-one location. LTR has offtake contracts with top tier EV and battery OEMs. Under our modelled assumptions, we expect that LTR is fully funded to free cash flow. We have made no changes to our earnings estimates in this report. LTR is an asset development company; our Speculative risk rating recognises this higher level of risk.
Incidentally, another ASX lithium stock that the broker is tipping as a buy with big return potential is Arcadium Lithium (ASX: LTM). Bell Potter has a buy rating and $7.25 price target on its shares. This implies potential upside of 93% for investors from current levels.
